New York Markets After Hours

Cirrus Logic soars on hopes for Apple devices

SharaTibken

Cirrus Logic Inc.'s
CRUS, +0.18%
bullish growth targets for the back half of the calendar year sent shares soaring Tuesday and heightened anticipation for new devices from major customer Apple Inc.
AAPL, -1.54%

The company, which makes audio and energy chips for smartphones and other devices, late Monday said its revenue should soar about 70% to 90% sequentially in the current period and again grow significantly in the December quarter. The company, whose guidance was much better than analysts anticipated, is benefiting in particular from its position as a major audio chip supplier to Apple.

"Across the board we're seeing some great things for the devices we've developed in the past year," Chief Executive Jason Rhode said during a conference call, according to a FactSet transcript.

The news sent Cirrus shares up 22% to $36.37 in recent trading, more than doubling over the past 12 months. Apple grew 2.1% to $607.38, up 55% over the same period.

Cirrus Monday projected revenue of $170 million to $190 million in the fiscal second quarter, well above the first quarter's $99 million and the $130 million estimated by analysts, according to Thomson Reuters. Its fiscal first-quarter results were largely in line with expectations.

Cirrus took pains to avoid talking about Apple during its conference call. The company derives more than half of its revenue from Apple, but it doesn't discuss the partnership or even mention Apple's name during its earnings calls, simply referring to the consumer electronics giant as a major customer.

"While we understand there is intense market interest related to our largest customer, in accordance with our policy, we do not discuss specifics about our business relationship," Mr. Rhode said.

Nevertheless, analysts consider Cirrus to be a gauge on Apple device production and a way to gain exposure to Apple without actually buying the Cupertino, Calif., company's shares. On Tuesday, the analysts took Cirrus' bullish guidance as an indication of ramped-up business at Apple, as the company prepares to release a new iPhone.

Media reports Monday pegged mid-September as the launch date for the new phone. And there is speculation Apple also will be releasing a mini-iPad at that time.

Barclays Capital analyst C.J. Muse said the strong top-line guidance confirms his belief that iPhone 5 production is well under way. He noted that should ease investor concerns on the near-term outlook for other semiconductor companies tied to Apple, such as MagnaChip Semiconductor Corp.
MX, -1.80%
MagnaChip's shares recently jumped 8.3% to $9.75.

And Topeka Capital Markets analyst Brian White noted it will be tough for Apple investors to ignore the big fiscal second-quarter outlook from Cirrus. He said the midpoint of guidance represents an 82% sequential rise and is well above the average 23% sequential growth for September quarters over the past five years.

"In fact, this represents the biggest sequential sales uptick for Cirrus Logic that we have on record," for the past 10 years Mr. White noted. He added it could indicate Cirrus chips are being used in a new product, such as a mini-iPad, along with the iPhone.

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